Bulk drug manufacturers express concern over hike in raw material costs

By: |
February 19, 2020 1:20 AM

Pharmaceutical companies alleged hoarding by some firms due to shutting down of factories and shortage of labour following the coronavirus outbreak as the reasons behind inordinate delay in supplies.

These include pain killers like Aspirin and Paracetamol, first-line diabetes drug Metformin and antibiotics such as Erythromycin. (Representative image)These include pain killers like Aspirin and Paracetamol, first-line diabetes drug Metformin and antibiotics such as Erythromycin. (Representative image)

Bulk drug manufacturers are increasingly expressing concern over shortage of active pharmaceutical ingredients (APIs) and other essential raw materials due to factory lockouts in China. Pharmaceutical companies alleged hoarding by some firms due to shutting down of factories and shortage of labour following the coronavirus outbreak as the reasons behind inordinate delay in supplies.

According to the Pharmaceutical Export Promotion Council (Pharmexcil) data, about $2.5 billion worth of bulk drugs and intermediates were imported from China. These include pain killers like Aspirin and Paracetamol, first-line diabetes drug Metformin and antibiotics such as Erythromycin.

While there is no impact on consumers because all the pharmaceutical products are under price control and prices cannot be increased unless approved by the National Pharmaceutical Pricing Authority (NPPA). As of now, we are managing with the stocks. However, if the current situation of extended factory closure continues for another three to four weeks, we have to bear the increase of APIs, especially for exports,” a drug manufacturer from Hyderabad said. Bulk drug manufacturers have approached the commerce ministry for a permanent solution to reduce the import levels of key essential ingredients from China. According to drug manufacturers from Hyderabad, on an average, API prices have increased by anywhere between 6% and 167%. For instance, the price hike for Nimesulide has gone up by 167% from January 2020 to date, Azithromycin prices are up 44%, Amoxycillin by 48% and so are price hikes for Norfloxacin, Ciprofloxacin, Paracetamol, Ranitidine, Diclofenac Sodium, Omeprazole pellets, Sulfamethoxazole, among others.

“We depend on raw materials from China and other countries. We import raw materials as well as finished products for both domestic consumption and exports.

Initially, we did not perceive any threat, but now, we are feeling the pinch as many factories have shut down operations in China,” a member of Bulk Drug Manufacturers Association (BDMA) said. Price hike includes the cost of raw materials and that of additives added to make the active components, besides the cost of labour, electricity, water, etc. needed to manufacture the APIs.

We are committed to the health and well-being of our employees. We are cooperating with government directives for the safety and well-being of our employees in all regions. At this time, we do not anticipate any supply disruptions as a result of the coronavirus outbreak in China or in any other areas throughout the world. Our current inventory levels of active pharmaceutical ingredients and key starting materials remain unaffected and are sufficient to offset the Lunar New Year Holiday extension,” a spokesperson from Dr Reddy’s said.

According to Pharmexcil, India is nearly 60%-70% dependent on China for imports, especially for vitamins, antibiotics such as Metronidazole, Ofloxacin, Levofloxacin, etc. “The dependence is much higher in intermediates, raw materials compared to APIs used in finished drugs. This reliance creates significant risk for India’s domestic demand for essential drugs. The risk has further accentuated since China alone contributes 51% of these imports by value. China’s contribution to India’s total imports increased by 19% from 2004 to 2007, and has been stable since. In volume terms, the picture is starker, with China’s share of imports going up to almost 80%,” R Uday Bhaskar, director general, Pharmexcil, said.

Incidentally, Pharmexcil and the industry members have represented to the government for the need to revamp the capacities of drug intermediates and key starting material industry. Pharmexcil has coordinated meetings between industry stake holders and the government to focus on some products and to expand the portfolio. A recent inter-ministerial meeting has decided to focus more on 60-70 largely imported /dependent products to manufacture low-hanging fruits. It is becoming imperative for the Indian government and pharmaceutical companies to understand the Chinese pharmaceutical market and its implications with respect to market access to facilitate pharmaceutical exports and reduce the burden of API or bulk drugs imports from China.

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